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PETITIONER: BASMATI DEVI

       Vs.

RESPONDENT: CHAMROO SAO AND ORS.

DATE OF JUDGMENT: 03/04/1964

BENCH: GUPTA, K.C. DAS BENCH: GUPTA, K.C. DAS SUBBARAO, K. DAYAL, RAGHUBAR

CITATION:  1964 AIR 1707            1964 SCR  (7) 633  CITATOR INFO :  RF         1966 SC 126  (7)

ACT: Mortgage--Execution of mortgage bonds--Liability to pay rent to  both mortgagor and mortgagees-Mortgaged lands  sold  for default  of  payment of rent-Purchase by  mortgagees-If  the -right to redeem exists-If the principle of s. 90 Trusts Act applies -Trusts Act, s. 90.

HEADNOTE: The plaintiff brought a suit for redemption of a large  num- ber  of usufructuary mortgages in favour of the  defendants. The  case of the plaintiff was that under the terms  of  the mortgage bonds the mortgagees were liable to pay rent to the land  lord.   The  mortgagees,  however,  defaulted  in  the payment of rent for some years.  A suit for arrears of  rent was  brought  by the land lord and a  decree  obtained.   In execution  of the decree the lands were sold.  According  to the  plaintiff, the purchasers of the mortgaged  lands  were only benamidars of defendants 1 and 2 and other  mortgagees. The  plaintiff claimed that the right of redemption was  not affected by the Court sale because the purchase was for  the benefit  of  the  plaintiff.   The  suit  was  contested  by defendants  1 and 2 only.  Their case was that the right  of redemption had been extinguished by the court sale; that the purchasers  were not the benamidars of the defendants.   The Trial -Court dismissed the suit.  On appeal, the  Additional District Judge set aside the judgment of the Trial Court and passed a preliminary decree for redemption. Against this decree the two defendants appealed to the  High Court.  The appeal was heard by the Division Bench. The  High Court held that in the present case s. 90  of  the Trusts  Act did not apply because the court sale took  place due  to  the  default  of  the  mortgagor  as  well  as  the mortgagees.   In  this  view the High Court  set  aside  the decree of the first Appellate Court and restored the  decree of the trial court. Held:     The  fact that the mortgagor had made  a  default, does not alter the  position  that the  mortgagee  had  also defaulted  in paying the rent he was liable to pay.  By  his default he has contributed, to the position that a suit  had

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to  be  brought for arrears of rent and  ultimately  to  the position  that the property was put to sale in execution  of the  decree obtained in the suit.  This contribution to  the bringing  about  of  the sale was a  direct  result  of  his position  as a mortgagee.  When therefore he  purchased  the property himself at the sale in execution of the rent decree he  clearly gained an advantage by availing himself  of  his position  as a mortgagee.  This is the position of law  even if the mortgagee’s liability was to pay less than the  major portion of the rent of the holdings.  In this view s. 90  of the Trusts Act applies to the facts of this case.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeal No.241 of  1961. Appeal from the judgment and decree dated March 4, 1958,  of the  Patna  High Court in Appeal from Appellate  Decree  No. 1335 of 1952. 634 R.S. Sinha and R.C. Prasad, for the appellants. Sarjoo Prasad and B. P. Jha, for the respondents nos. 1  and 2. April 3, 1964.  The judgment of the Court was delivered by      DAS GUPTA, J.-This appeal arises out of a suit for  re- demption  of  a large number of  usufructuary  mortgages  in favour  of  the defendants.  The plaintiff  who  owned  1.67 acres.  of lands which were recorded in Khata 56  and  10.56 acres  in Khata 57 in village Sarifabad gave 1.27 acres  out of Khata 56 and 8.24 acres out of Khata 57 lands in mortgage to the several defendants by separate mortgage bonds.   Part of  the remaining land was sold by him and the rest  settled by him with the first defendant on Batai terms. The plaintiff’s case is that under the terms of the mortgage bonds  the  mortgagees  were  liable  to  pay  rent  to  the landlord.   The mortgagees however defaulted in the  payment of rent for some years.  A suit for the arrears of rent  was brought by the landlord and a decree obtained.  In execution of the decree the lands were sold.  The purchasers were  one Besolal   and  Mst.   Kirti  Kuer,  who  according  to   the plaintiff,  were only benamidars of defendants 1 and  2  and other mortgagees.  It is his case that this purchase  enured for  the benefit of the mortgagor, that is,  the  plaintiff, and  so  the right of redemption of the mortgagees  has  not been affected.  The prayers were for a declarations that the purchase  was  for  the benefit of  the  plaintiff  and  for redemption of the mortgagees. The suit was contested by defendants 1 and 2 only.  Of these defendants,  Chamroo  Sao  is the  purchaser,  and  Besolal, defendant  2 is the son of the other purchaser  Mst.   Kirti Kuer.   They  denied the allegation that  Besolal  and  Mst. Kirti  Kuer  were their benamidars and  contended  that  the right of redemption has been extinguished by the court sale. The  Trial Court held that the plaintiff had failed to  show that  the auction purchasers were benamidars of the  mortga- gees and in that view dismissed the suit. On  appeal, the Additional District Judge, Patna, came to  a contrary conclusion.  He held that the put-chase, though  in the name of Besolal and Mst.  Kirti Kuer was really by  the, first  and  the  second defendants.  He  also  accepted  the plaintiff’s case that under the terms of the mortgage  bonds the mortgagees were liable to pay the rent and the rent sale having  been  brought  about  due  to  the  default  of  the mortgagor  and  the mortgagee they could not be  allowed  to take  advantage of the sale.  So, according to  the  learned

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Judge, the equity of 635 redemption  in favour of the plaintiff still  subsisted  and that  he  was  entitled to redeem  the  mortgaged  property. Accordingly,  he set aside the judgment of the  Trial  Court and passed a preliminary decree for redemption. Against this decree the two defendants appealed to the  High Court of Patna.  The appeal came up for hearing in the first instance  before a Single Judge (Mr. justice Sahai).   On  a consideration  of the evidence, he was of opinion  that  the liability  of  rent of 2.67 acres was upon defendant  I  and that  payment  of rent of 87 acres which was  purchased  and 1.76  acres  which was taken in ijra, the total  being  2.43 acres,  was  upon defendant 2, that for payment of  rent  of 3.83 acres was upon the other defendants, and the  plaintiff was  liable to pay the rent of only about 3.39 acres out  of the  entire  area of 1.67 acres of Khata no.  56  and  10.65 acres  of Khata no. 57.  The question which therefore  arose was  whether s. 90 of the Trusts Act would operate  to  keep the equity of redemption alive in cases where the sale  took place  due  to the default of the mortgagor as well  as  the mortgagees,  the default on the part of the mortgagees,  who purchased the properties at the sale being also substantial. The  learned  Judge referred this point for  decision  to  a Division Bench. The Division Bench of the High Court held that s. 90 of  the Trusts  Act did not apply to these circumstances.   In  this view the High Court allowed the appeal, set aside the decree of the first appellate court and restored the decree of  the Trial Court. The  present appeal by Mst.  Basmati Devi, who is the  legal representative of the original plaintiff who was substituted in   his  place,  is  against  the  High  Court’s   decision dismissing the suit. In  coming to a conclusion that s. 90 of the Trusts Act  did not  apply  to cases where the sale took place  due  to  the default of the mortgagor as well as the mortgagee, the  High Court  appears  to  have  followed  a  number  of   previous decisions of the same High Court. In support of the appeal it is urged that the view taken  by the  High Court in the present case as well as the  previous decisions  of the Patna High Court is incorrect and  defeats the very object of s. 90 of the Indian Trusts Act.   Section 90 of the Indian Trusts Act is in these words: -               "Where a tenant for life, co-owner,  mortgagee               or  other qualified owner of any property,  by               availing  himself  of his  position  as  such,               gains an advantage in               636               derogation of the rights of the other  persons               interested in the property, or where any  such               owner, as representing all persons  interested               in such property, gains any advantage, he must               hold,  for  the  benefit. of  all  persons  so               interested,   the  advantage  so  gained   but               subject to repayment by such persons of  their               due  share of the expenses properly  incurred,               and  to,  an  indemnity by  the  same  persons               against  liabilities properly  contracted,  in               gaining such advantage." The  question for consideration is whether in  circumstances like the present where the decree and the sale in  execution of it are brought about by the default of both the mortgagor and  the mortgagee, the mortgagee can be said to have  taken advantage of his position by purchasing the property at  the

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sale.  The High Court appears to think that unless the  sale was brought about by the default of the mortgagee alone  the mortgagee  cannot  be said to have taken  advantage  of  his position  in  making  the purchases.   What  seems  to  have weighed  with  the  learned  Judges  is  that  even  if  the mortgagee had done his duty by paying the rent he was liable to  pay,  the  sale  would still have  taken  place  as  the mortgagor did not pay that portion of the rent which he  was liable to pay.  So, they thought that the mortgagees, though they  took advantage of the fact that the property had  been brought  to sale, could not be said to have taken  advantage of their position as mortgagees. With this view we are unable to agree.  In our opinion,  the fact  that the mortgagor had made a default, does not  alter the position that the mortgagee had also defaulted in paying the  rent  he  was liable to pay.  By  his  default  he  has contributed  to the position that a suit had to  be  brought for arrears of rent and ultimately to the position that  the property was put to sale in execution of the decree obtained in the suit.  This contribution to the bringing about of the sale  was a. direct result of his position as  a  mortgagee. When therefore he purchased the property himself at the sale in  execution  of  the  rent decree  he  clearly  gained  an advantage   by  availing  himself  of  his  position  as   a mortgagee. This,  in  our opinion, is the position in law even  if  the mortgagee’s liability was to pay less than the major portion of  the  rent of the holdings.  Whether this would  be  true even where the portion which the mortgagee is liable to  pay is so very small that the property is not ordinarily  likely to be brought to sale for that amount, it is unnecessary for us to decide in the present case. In  the present case, the finding is that the  liability  of the  defendants 1 and 2 was to pay a substantial portion  of the  rent.  To say in such circumstances that they  did  not take 637 advantage  of  their  position  as  mortgagees  is  entirely unrealistic  Such  a  construction would put  a  premium  on dishonesty  on  the part of mortgagees whenever  the  entire burden  of  payment  of rent was not left  squarely  on  the mortgagee as under the provision of s.76 of the Transfer  of Property Act. Mr.  Sarjoo Prasad, who appeared before us on behalf of  the respondents,  tried  to  persuade us that in  any  case  the plaintiff’s  suit should fail as regards the lands  recorded in  Khata  No. 57.  As, according to him,  these  mortgagees were  not  at all liable to pay any portion of the  rent  of this  holding.  He drew our attention in this connection  to Ex. 2, the mortgage bond executed in favour of Chamroo  Sao, and  to the statement made therein: "Annual rent payable  to the  zamindar  is the concern of me, the  executant".   This argument proceeds on the basis that the holding recorded  in Khata No. 57 continued to be separate and distinct from  the Khata  No. 56.  It is thus in direct conflict with the  plea of these very defendants in their written statement that the two holdings had been consolidated into one holding with one rental.   As the oral and documentary evidence on the  Paper Book prepared in the appeal did not clearly show whether  or not these two holdings had become one, we called for one  of the documents, Ex. B which seemed likely to throw some light on  the matter.  The document has now been received.  It  is the  copy of a judgment of a suit between these  parties  in which this very question, viz., whether the two holdings had been  consolidated  into  one or not, was  raised.   It  was

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decided hat such consolidation had taken place.  It is clear that  it was after such consolidation that the  second  rent suit was brought in respect of that consolidated holding and it was that consolidated holding which was sold in execution of the decree.  It is clear therefore that the mortgage bond Ex.2  in which the mortgagor accepted liability to pay  rent to  the zamindar in respect of the mortgaged land  in  Khata No.  57 does not affect the correctness of the High  Court’s finding  that the liability to pay rent of the holding  that was  sold  was  partly of the mortgagor and  partly  of  the mortgagees  and,  that  it  was  the  default  of  both  the mortgagor and the mortgagees that brought about the sale. Accordingly, we allow the appeal, set aside the judgment and decree of the High Court and restore the decree made by  the Additional  District Judge, Patna.  A  Pleader  Commissioner shall  be appointed by the trial court on a deposit  of  Rs. 50/- as his fees by the present appellant within two  months from  this date for taking accounts as to the amount due  to the  defendants  on the date of the decree.   A  preliminary decree for redemption shall be passed in the usual terms. As the suit as also the appeal before the District Judge had been brought in forma pauperis the High Court made an order- 638 directing  the plaintiff to pay the court-fee on the  plaint as  well as on the memorandum of appeal.  That order is  set aside.    Instead,  we  order  the  first  and  the   second defendants  in the suit to pay the court-fee payable on  the plaint  as  also on the memorandum of appeal.   The  present appeal to this Court has also been brought by the  appellant as  a pauper.  As she has succeeded in the appeal, we  order the  contesting respondents, i.e., the first and the  second defendants,  to pay the court fee payable on the  memorandum of  appeal to this court.  The appellant will get her  costs from the first and the second defendants through out.                      Appeal allowed. 639